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I don't get it -- Amex and Discover are still providing healthy competition, so the "duopoly" the author complains about seems to be largely irrelevant. Competition between cards is thriving and consumers benefit -- witness the miniscule transaction fee the credit card companies keep after paying your rewards back of 2% to 5%, when you pay your bill on time.

The article's main point is that such large companies are a cybersecurity risk, and that the government should regulate/nationalize/globalize payment infrastructure.

Unfortunately, experience tends to show that governments would be far worse at providing secure, low-cost payment services. Also, credit cards already are highly regulated when it comes to consumer protections.

So, this article is just not making a lot of sense to me.

The article (particularly the linked tweet) somewhat addresses your point: Amex and Discover may offer a superficial degree of competition for consumers, but banks have to obey Mastercard and Visa's rules even when it comes to offering bank accounts to merchants, otherwise they (and therefore all their other account holders) can't participate in the 80% of card transactions that are on the Mastercard and Visa networks.

If you're a bank who wants their business customers to receive payment via Mastercard, you are not allowed to give a bank account to or otherwise handle payments for anyone on the MATCH list, otherwise Mastercard will shut off your bank's access to their network completely, probably putting you out of business. There is little transparency about how entities end up on this MATCH list. The article does not propose an exact regulation, but the end goal would be that a single company can't arbitrarily shut people out of most of the financial system.

I have seen many stories of legal and legitimate businesses for things like weed (legal in the stores location) and legal porn sites getting their merchant accounts shut down because the payment processors just don't want them to deal with it leaving cash as the only option.

Weed is still federally illegal in all locations in the US.

Good point that perhaps "regulation" is not a good thing, and that the most free, common payment method is the decentralized one: cash.

People laugh about bitcoin, and the implementation surely has its drawbacks, but the idea of a decentralized digital payment system is alluring.

The hard reality is there’s a high rate of fraud and chargebacks in a lot of these types of businesses. It’s a tricky one for the merchants to manage but things like 3DS2 should help, maybe, if they ever sort it out properly...

I see your point from a merchant perspective. A thought: Why don't merchants in high-risk categories such as porn, gambling, etc. use debit transactions instead? Where they wait for funds to be transferred into their account and settled before providing goods and services.

CC rewards seem like a indirect regressive tax. Wealthier consumers who can afford to pay on time and have better credit ratings are subsidized by poor consumers who actually use the "credit" part of "credit card".

And, you would be correct, in a sense. Wealthier consumers benefit disproportionately from CC rewards compared to less wealthy consumers:

Paper from 2010 showing this: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1652260

News article with a good summary: https://www.reuters.com/article/us-usa-fed-wealthtransfer/cr...

+1 for actually supplying sources!

tldr: >> ...the lowest-income household ($20,000 or less annually) pays $21 and the highest-income household ($150,000 or more annually) receives $750 every year.

If people didn't spend money they don't have the problem you describe dissolves. No one has to use credit cards and being financially literate is an individual responsibility.

If companies weren't allowed to offer predatory lending towards financially illiterate the problem you describe dissolves, this is actually much easier to implement than individual responsibility.

Ah yes, the old "let's block stupid (poor) people from accessing financial instruments for their own good" argument while at the same time having legal gambling.

predatory lending != lending.

Predatory lending generally refers to companies like payday loan companies and cash advance companies which feed off of forcing people to continuously borrow until they can't borrow any more.

Lending should absolutely be accessible to everyone in some way or another, especially in a world where a transmission failure can lead to a lost job if you can't afford to fix it right away.

It’s predatory the moment it feels too high to you.

Hey, if you want to argue that gambling should be more restricted, then go ahead.

It is highly restricted in many places.

The actually financially literate know how much more buyer protection you get with a CC than with any other form of payment.

And why is that? It's a beautiful example of regulatory capture that led to credit cards gaining advantage over other payment methods.

Such protections should either be scrapped or extended to cover all methods.

> Such protections should either be scrapped or extended to cover all methods.

You are free to invent a payment method and provide all these protections to your customers. Why would you want to remove protections that CC companies are providing to their users?

> financially literate is an individual responsibility.

Is being able to read and write an "individual responsibility?" How about the ability to communicate in a language at all? What about any other basic core skill that would make a person capable of learning more things to make them "productive?"

"Individual responsibility" as it pertains to these topics is at best a misnomer, if it even names an existent thing at all.

Surely you don't think it's ok for, say, a Company Town to exist? Can you extrapolate from there why it's not ok for credit card companies to bamboozle less educated Americans for money?

I would encourage you to frame your disagreement with statements and facts. Asking questions expecting the reader to draw the same conclusion as you isn't a useful discussion mechanism. Especially when the reader doesn't agree with you.

I'm not sure what the relevant facts would be around an extremely value based argument of who is responsible for educating a society.

I guess we could look at the general fact that education is one of the better investments to increase a nation's GDP, bit I'm more concerned with the ethics than the money.

Here are some facts: https://nces.ed.gov/naal/kf_demographics.asp#3 , about 14% of adults in the US in 2003 had little to no reading skills.

Yes, I realize you’re not being genuine, but those are all your responsibility to do/learn. Although everything you mentioned is what you should learn as a child, so we have a moral/social code for parents and the community along with some help from schools to teach these basic principles.

I could follow your argument if the card issuers weren’t transparent in their pricing and terms like payday loan companies. However, the interest rates are laid out very clearly several times as you apply and are approved as regulations demand. I’m all for education but at some point you have to let people do what they want with their money.

I am being genuine.

I'm not sure the country has taken the necessary step up in early education to even have the population have a baseline understanding of what interest rate is. I didn't learn that anywhere in elementary, middle, or high school. I had to figure it out on my own.

I don't think that's acceptable. I think that leaves our population vulnerable to predatory companies, who have a disproportionate ability to lobby the government to allow them to stay predatory.

I envision a capitalist hellscape where the population is kept purposefully reapable.

You mean to tell me all my woes in life aren't some form or another someone else's fault?

I'm ignorant to CC companies' financials. But I would have thought their revenues are driven by transaction fees, which end up ultimately getting passed down to the buyer through higher prices. Would be interested to learn more though about CC economics. It would indeed be sad if CC rewards operated like a regressive tax, as you say.

If you have poor credit, you get a crappy credit card: low limit, high interest rates, no rewards.

If you've got great credit, you get a high limit, slightly-less-astronomical rates, and all the rewards.

The cost of the rewards is (as I understand it) mainly carried by the transaction fees, spread out over all purchases everywhere. So you have pointless price increases for people who /don't/ use credit cards (like me) or have poor credit, and the benefits of that 'tax' going to users with good credit (ie, rich people). So, yeah, it's a wealth transfer to people with better credit.

I had poor credit at a point in time. I "bought" a credit card to build my credit by putting a deposit. After 1 year of on-time payments I was able to graduate to a credit card with cash back. The system didn't feel punitive to me, and honestly, I had poor credit in the first place because I was irresponsible while in college.

You just described a scenario in which you were systematically bilked for at least a year —- paying full retail prices, which presumably paid for full transaction fees, which in turn did not pay you any rewards —- so you could graduate to the privilege of being allowed to purchase a consumer line of credit that reduced the level of punishment to something merely appropriate.

There are relatively few businesses in the world that can rip someone off for a year, then allow them to pay a more reasonable fee in exchange for guaranteed business, and still have the consumer claim that the system “doesn’t feel punitive.” The whole thing is kind of brilliant.

It was a painful year that taught me a lesson. Looking at how fiscally responsible I have become, I really have no complains.

It's not financial responsibility or learning lessons, it's the fact that you consider earning cashback to be a reward for the ordeal you endured.

By participating in the cashback scheme you're putting more people through that ordeal by means of higher fees.

The only way to win is not to play.

I don't consider earning cash back to be a reward, but I see the credit card as a product that lends money based on a risk evaluation.

At that moment in my life, the risk on lending me money was high and therefore the product I could access was limited. There was little incentive for the bank to risk lending me money, so I needed to purchase my way into rebuilding my credit. As the risk in lending me money decreased, banks became incentivized to offer me lines of credit so the cash backs kicked in.

Rebuilding my credit has allowed me to access lower rates on my mortgage , investments loans and other financial tools that have greatly contributed to my quality of life. I would consider that to be the reward.

The problem is that the credit card "lending money" function is not what transaction fees pay for, and these fees are paid by all market participants -- including cash customers. People should be able to separate the payment function of a credit card (which is what merchants pay transaction fees for) from the "line of credit" function that banks make money on. However, this scenario would be less profitable for the industry, and so a small cartel of payment card networks and operators have worked hard to jam the two functions together. As a result, everyone (including cash customers) is heavily penalized for merely participating in the economy, unless they also purchase a profitable and risky line of credit.

It's frankly a brilliant scam, and the fact that people don't think it's a scam is its most brilliant aspect.

Discover has a secured card that earns cash back.

Of course, the system is designed to encourage you to be irresponsible in college.

It can get way worse than revenues being driven by interchange fees. Banks like Wells Fargo and Capital One operate like a classy pay-day loan company, targeting sub-prime customers who are more likely to not pay on time. I'd recommend reading this for more info: https://newrepublic.com/article/155212/worked-capital-one-fi...

Wealthier consumers also have more to gain on the luxury perks offered by cards. If you value 5 star hotel stays and airport first class tickets then you get more of the "value" back from the card fees. But actually with chase you can get a lot of those fees back on non-luxury redemptions too, but you'd still have to be rich enough to travel.

It's not government. The same incentive structure for businesses matches better to loyalty cards.

Are they?

Visa/Mastercard charge merchants 1-2% interchange fees for each transaction.

I'd guess that people putting $20k a month on their Visa (I know a few that do) are paying for themselves with the interchange fees.

The vast majority of that fee that merchants pay goes to the bank, not Visa or Mastercard. And a vast majority of what the bank gets in that fee goes back out to the card owner in the form of rewards. You see merchant fees of 1-2% because that is pretty close to typical rewards paid out on credit cards.

There's a bit of misunderstanding in your statement. Most of the money made by companies in payments systems comes from transaction fees, not from interest. When companies offer you better rewards, that's them competing to have you use their credit card rather than the competition's.

Sorry to tell you but that's not true. Literally the top Google result says the contrary:

> "Out of the various fees, interest charges are the primary source of revenue." [1]

Yes, credit cards charge a large transaction fee, but wind up refunding a large portion of that back to the consumer in the form of rewards, so these days that's not the main source of profit.

[1] https://www.valuepenguin.com/how-do-credit-card-companies-ma....

It's not though. No one is forcing you or anyone else to sign up for credit cards - it's a choice, unlike taxation.

It's not optional, though.

I still have to pay the higher transaction costs even without a credit card, because the credit card companies require that vendors have the same prices for card or cash, resulting in higher prices for everyone.

I've seen stores (e.g. electronic stores) offer reduced prices when paying in cash vs. credit card. Is this law only in the US?

Reduced prices for cash used to be against the Visa/MC merchant terms. They lost a lawsuit over it, but it's fairly ingrained by now.

You'll see cash discounts at some gas stations, and the occasional small coffee shop or takeout place will have a $10 minimum, but otherwise it's gonna be the same price most places.

Seems like an opportunity to raise awareness for this information then.

Will you go to jail or pay a fine if you don't use a credit card? No?

Then it's nothing like taxation and it is optional.

Think of sales tax. You have the option of paying it or not buying things; it's not optional.


We've warned you before about personal attacks, so I've banned this account. If you don't want to be banned, you're welcome to email hn@ycombinator.com and give us reason to believe that you'll follow the rules in the future.


Work on your reading comprehension...

The card companies charge merchants for transactions. The merchants raise their prices to cover those transaction costs: For a very long time (and still, in a few places) it was against the card company's terms of service to have a card usage surcharge. A very few places now have 'cash discounts' or don't accept cards at all, but these are by far the exception. As a result, /everyone/ ends up paying for credit card rewards, even those who don't use credit cards.

How would you pay for things online, many of which are not available in person? Or stores/airplanes/services that don't accept cash?

Debit cards? The other option is to use a Credit Card but pay off at the end of the month. Why is that so difficult? That’s literally like a Debit card except for the additional “buffer” of safety and security from your bank account.

Every debit card I've had has still involved a credit card company in some way - they've all had the visa logo on them.

That's true, I am not too familiar with the finance system, how come a debit card needs a middle man such as VISA? They help with the transaction between two banks?

The situation is that there is a network called Visa Debit that some banks use for their network for debit transactions. It may seem new, but it evidently dates back as far as 1982.

I'm in Canada. With one exception, no bank client card I have had (which were all usable for debit) had any Visa logo on it. That includes current ones.

The exception is one TD client card.

The situation is explained here:


TD is one of the banks that offer Visa Debit. This TD client card is also Interac-branded, so I'm guessing that the card will use the Interac network for domestic transactions, and in that case its Visa Debit personality does not come into play.

Those are not the only two networks for debit/ATM in Canada. There is also "The Exchange":


(used by a lot of smaller banks and credit unions).

The Canadian Credit Union Association also runs an ATM network called AccuLink.

It's important to know which network your card uses if you want "ding free" transactions. E.g a "The Exchange" card can be used at an "Interac" ATM, but there will be a fee.


That doesn't make it any less of a duopoly. The whole point of the article is that visa/mc have too much power and there is a lot of systemic risk by having only two competitors in this industry in particular.

Even if they aren't extending credit they're still facilitating the transaction - it's not like the visa sticker is on there for marketing purposes

Not what we're talking about in the OP comment.

That's what I was talking about - even if they aren't charging fees, they're involved.

There's plenty of cases in technology where "but we don't do anything with your data!" is not a good enough excuse. Many of us still argue for decentralization or federation or user controlled data, etc. Similar concerns I have for visa.

I get the impression you don't think much of me. That's ok, but why did you feel the need to tell me?

alt_f4 is a troll. I don't think they understand what we're arguing about lol

your mum is a troll

I can't think of a bank that doesn't use a card that works as a credit card when it comes to online transactions.

They're still visa or MasterCards though...

> Visa does not issue cards, extend credit or set rates and fees for consumers; rather, Visa provides financial institutions with Visa-branded payment products that they then use to offer credit, debit, prepaid and cash-access programs to their customers.

Everyone in Europe uses debit cards. You don't have debit cards in the US?

It's a plastic card, it is issued by your bank, it's still using the visa/mastercard network, but instead of credit, it is tied to actual funds in your bank account.

> "No one is forcing you or anyone else to sign up for credit cards - it's a choice, unlike taxation."

Tell that to the increasing number of shops that no longer accept cash.

Is this really a thing outside of SF? I haven't seen any cashless stores in my city yet. In fact, 3 of my favorite restaurants are still cash-only.

Strange, about 2y ago, on our visit, there were lots of places in SanFrancisco who didn't accept cards.

you can't rent a car without credit card, they won't accept debit card or even debit VISA/MASTERCARD, it has to be full on credit card

I don't know anyone personally that owns a "credit" card. Virtually nobody uses them here in France and I think in the rest of Europe, it's always debit card. Never had an issue with renting cars.

It is a common issue for French people renting cars outside of France - search on Google, there are hundreds of angry people who ended up with no car because agencies in other countries refuse debit cards (debit immediat)

Why would renting agencies refuse debit cards? You get your money, just like credit cards...

My guess would be single message (debit) vs dual message systems. They probably want to hold / authorize a large amount first as insurance.

What's strange is that you can authorise on debit cards (at least french ones)...

I should have been more specific, In the past few years I have rented cars in Europe, in the US, in South Africa and in Australia. Never had an issue. I generally use Avis or Budget, sometimes a local company.

That's not true at all. It's certainly not common to require credit cards for car rentals in Europe. Must be an American thing.

>Virtually nobody uses them here in France and I think in the rest of Europe,

Definitely not the case here in the UK, credit cards are very common.

Other than renting a car or a hotel room, it seems you can conduct most if not all of your affairs without a credit card. Credit cards can be relegated to those limited transactions.

Most of the large car rental companies in the US will let you rent with a deposit on a debit card.

The governments must step in and ban interest altogether. This is only fair, and will force banks and businesses to transact morally with customers.

Every time I pay for something in cash at a store, I’m paying for those 2-5% rewards, even though I won’t partake in them. This happens because the credit card companies, by dint of their crushing market power over small retailers, can force stores to charge identical cash and credit prices. I suppose a well-functioning competitive market would fix this problem, but weirdly enough Amex and Discover don’t seem interested on competing to offer a better deal to retailers.

Credit card fees and rebates are such an amazing example of how systems can fool human beings. The entire system clearly could not exist in a frictionless, well-functioning marketplace —- but people seem hard pressed to actually figure out how the whole thing works. It’s kind of brilliant.

> I’m paying for those 2-5% rewards

Well.. you're paying a 2-5% higher price, but the merchant gets to keep all of that; it's not as if they have to also pay that fraction into their transaction processor.

> I suppose a well-functioning competitive market

You ever see retailers that offer a discount card? Like, spend $50 here get $10 off in the future? Typically they'll only offer those for cash transactions. This is why.

Anecdotally, I have never once seen those discounts limited to cash transactions in the United States

In a properly competitive market the merchant doesn’t really get to keep it. Presumably they set their prices to a value that is X% higher than where they would normally set their prices without the need to pay transaction fees. If exactly half their business is paid in cash/debit and half in credit, then X might be set to something like half of the excess CC transaction fee. Then the credit card customers get to split up all of those rewards amongst themselves, and the cash/debit customers get nothing.

So get a rewards card. Some percentage of the sales taxes go to support programs I don’t agree with or use. And I can’t escape that. However, one could start a cash-only store if one wanted.

You are also ignoring the cost of cash. Theft and cash handling isn’t a zero cost. Why should I, as a credit card user, be forced to subsidize losses due to cash handling? We could also talk shoplifting as well; policies that don’t punish shoplifters means I get to subsidize that as well. We could go on and on and ultimately it gets absurd. If you don’t like the price, go somewhere else and the market can sort it out.

> Why should I, as a credit card user, be forced to subsidize losses due to cash handling

How about the store gets to decide what to charge?

Most stores seem to believe that credit cards are more expensive, which is why they try to offer discounts for cash.

So the facts do not back you up.

You shouldn't be forced to subsidize anything. That's the whole point. At a minimum: the government should recognize the market power imbalance between card processors and small businesses, and ensure that the stores can set their own prices appropriately. If cash or debit is genuinely more expensive, let stores reflect that fact in their prices offered to consumers -- rather than prohibiting it via a contract they can't say "no" to.

The government can make a law that says credit card merchant agreements cannot prevent a shop from making cash prices lower than credit card prices.

Then shops will have two prices cash price and credit card price. Then people will use cash more, and the government will lose some of the information they get from reading everyone's credit card transactions.

Do you think this affects the government's decision? Or are politicians simply bribed by visa/mastercard?

Imagine if companies charged 2-5% less because they didn't have to fund CC company marketing tools like cashbacks.

That is common. My grocery store, my bodega, my doctor's office, my dentist -- they all offer a 5% discount for paying in cash.

Obviously not everyone does it, but it's certainly not uncommon.

On the other hand, there are also a lot of costs associated with handling cash. The expense of tracking bills and coins and going to the bank every day is not insignificant. So it's pretty easy to argue that there's no reason for cash discounts either, because handling cash can actually be more expensive than handling cards, particularly when you're doing it for only 5 or 10 percent of customers.

That's a little different. They offer discounts of 5% because they then don't report the income and don't pay taxes.

The CC companies are only taking 2.5%-3.2%. If they're offering a 5% discount for cash - it's almost certainly tax evasion.

You're forgetting the percentages are on top of a ~$0.30 flat fee (though obviously this varies).

So if you buy a $2 Coke, it's not a $0.054 fee (2.7%), it's $0.354 (or a whopping 17.7%).

Maybe my dentist evades a few taxes, I dunno. But people buy cheap things at the bodega, so it probably is closer to the actual fees.

If the merchant doesn't offer the same cash discount for debit cards, then it's tax evasion. Debit card fees are a few cents, and the only reason to offer a big discount for cash, but not debit cards, is to not have the transaction on paper and hence evade taxes.

How could I know are my card credit or debit from system's point of view? I have two cards in my bank, both are exactly same MC cards, embossed, and all (not some Maestro variation). One card is linked with my current account — I have real money at this account, my employer pays my salary by transfer to this account and such. I can not pay if thus account is depleted. Second card is linked with credit account, where I have some limit, and I need to pay off in 28 days after end of each month or I'll pay draconian interest. But cards are exactly the same, with very similar numbers. And I never had any problems with any if these cards, like one works and other doesn't. Is one of my cards debit and other is credit or they are credit both?

Based on your description, you have one debit card and one credit card.

If it says debit on the front of the card, it is debit.

I’ve never seen this work in person, but some people claim their debit card worked as a credit card and whatnot. Even if that is true, all merchant systems I’ve worked with allow the merchant/cardholder to select debit or restrict transactions to only debit.

Both cards don't have words "debit" neither "credit" on them. I need to be really careful to use right one, as they are virtually indistinguishable. Yes, from my point if view one is debit and one is credit, but I wonder is it possible to know what does payment system think about them? I dream about bank for geeks, where all technical information about each transaction could be seen in web interface :-)

That's interesting. I've never seen a debit card not say debit on it somewhere.

I don't think that "tax evasion" is a fair assessment.

This isn't the full picture. Debit card transactions might only be a few cents. But you still have to pay a fixed cost for the machine and related bits. For some businesses, that cost might be too high to justify.

I have hundreds of experiences with small merchants, and it’s definitely a fair assessment. With chip and pin (at least in the US), there is no risk of chargebacks and the money gets transferred in at most 2 days. Total cost of accepting debit cards is minuscule, unless your a kid running a lemonade stand.

Also, chargebacks are a cost to merchants. In many cases, merchants will have money clawed back until they prove that the charge was not fraudulent. This requires keeping copies of receipts, signatures, etc. So, the true cost is far higher than just the transaction processing fees. Remember, the credit card companies make the rules and decide who gets to keep the money in a dispute. The merchants have to decide if they will accept credit cards because customers demand it or if they will go with cash only and lose out on potential sales.

There are payment standards like UPI in India and mobile number based banking , which offer transactions for very less or no cost ( mostly debit driven )

UPI is great and so is NEFT, many other Asian countries are in talks to replicate these successful models in their own countries.

Also, India came up with RUPAY which is a great answer to VISA/MasterCard monopoly. But somehow it didn't catch up in usage I think.

Indeed, let's imagine. I'm guessing that the increase in seller revenue and decrease in consumer price would sum to... somewhere between two and five percent.

No one cares about numbers like that. That's way, way below the convenience threshold for a typical consumer. Most of us, me included, would rather pay an extra 3.5% than fiddle with deciding on which card to use.

Which is to say: the market has spoken. We've settled on the duopoly not because it's a trap but because it actually maximizes utility. The uniform convenience of "credit cards just work" has quantifiable economic value. And it turns out to be somewhere around 2-5% of the transaction.

Businesses aren’t required to accept credit cards.

But it obviously hinders their business if they don't, in the US at least. Even most food trucks typically have Square terminals (or similar) for card transactions.

Which leads me to believe that it's generally worth it for businesses, despite the "fees".

So, Europe?

I don't get it -- bringing up Amex and Discover is like bringing up Bing and DuckDuckGo when people talk about the Google monopoly.

I was curious if this was true so I looked it up. AmEx + Discover have 20% - 25% market share depending on the metric you care about. Bing + DDG have 8%



The stats are all over the place. This report says Amex + Discover is ~11% of US purchase volume in 2019. https://nilsonreport.com/publication_chart_and_graphs_archiv...

The article references [1] which says,

"Visa holds a 60% share of the credit and debit card market, followed by Mastercard with 30%, according to Ellis, with American Express far behind at 8.5%."

That puts Discover + AmEx at 10% or so.

1. https://www.reuters.com/article/us-visa-mastercard-stocks/sw...

Except Amex is the highest end card used predominantly by financially secure individuals. Bing is... not that.

Except in practice, the vast majority of Amex users also have Visa/Mastercard just in case (e.g. Visa/Mastercard users are close to a superset of Amex users).

Also it’s like bringing up search alone when talking about web.

In reality an intermediary called “payment processor” handle all CC brands in single system and they are the ones enforcing ideological punishments to merchants.

Like there’s web search and web browser, card networks and payment processors both should be brought up.

> In reality an intermediary called “payment processor” handle all CC brands in single system and they are the ones enforcing ideological punishments to merchants.

Yes, payment processors enforce the rules, but don't typically make the rules.

As I am sure you can imagine, this can result in plausible-deniability-type finger pointing ("we don't make the rules" / "we're not responsible for the rules being misapplied") when an organization is cut off.

Amex and discover maybe popular in the US, but rest of the world still has a duopoly. I'd say 90%+ cards in India are visa/mastercard.

India also recently introduced RUPAY which is an alternative to VISA/MasterCard duopoly. Don't know about the success and usage of that though.

As someone who has never used visa or mastercard and only discover for credit cards (I do have a visa debit card) I second this sentiment. There is no duopoly from my vantage point.

But since the retailers can't offer discounts for cash transactions, people who pay with cash are being over charged and subsidizing those fees.

That really depends on where you live. It seems pretty confusing because (a) federal law made surcharges for using a card legal under a 2013 settlement with Visa and MC, and (b) there have been a bunch of federal court cases, including a 2017 Supreme Court case, that invalidated some state laws that prohibited surcharges.

Interestingly, even now that many merchants are allowed to offer a discount for using cash, most don't because they've likely figured out (a) if they lose just 1 sale in 30 it's likely a net negative for them, plus (b) people are likely to spend more, especially on impulse purchases, when using a card, and (c) there is just a sense that it can be annoying to customers to have to pay more for using a card, taking away from customer goodwill.

Retailers can offer discounts for cash transactions, per the Durbin Amendment to the Dodd-Frank bill of 2010.


It depends on where you live. 10 states have laws that prohibit or restrict discounts for cash transactions: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas. Some of those restrictions have been invalidated by federal courts, but I was somewhat confused about which states were affected.

Perhaps this is explicitly allowed (you did say restrictions) but in Kansas it isn't uncommon to see gas station signs displaying a cash price and a card price.

I have definitely personally seen many instances in which you get a discount paying in cash in California. Maybe they get away with it because they technically frame it as charging extra for paying with a card?

Weird, because in three of those states (New York, Texas, and California) I have used cash to get a cash discount in the last year.

I imagine it's because of lack of enforcement?

All three of those states I believe had their surcharge bans invalidated by federal courts. Texas' law was declared unconstitutional in summer 2018: https://faq.sll.texas.gov/questions/9631

Well, after trying to negotiate cash discounts ~25 years ago on a couple fairly significant purchases for me (furniture) I gave up and joined them... By carrying a discover card, which at the time was just about the only cash back card in existence (the only one I knew about).

So, I still favor the discover (despite now being part of Morgan Stanly?) for most purchases, but when its rejected I fall back on a MC with a cashback program.

That program pays for my computer hardware...

> But since the retailers can't offer discounts for cash transactions

Citation needed.

Sure Amex and Discover provide alternatives but if you want to start a credit card company you dont get to tag team with those two at all as far as I can tell. Which I think is a bigger problem. If you as a bank want to start your own credit card you have to go for the most supported provider to even attract potential credit card holders.

The competition between credit card issuers is healthy. It's the payment processor side that isn't (though micropayments seem poised to disrupt the space).

No one uses or takes those.

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